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Telefonica (TEF) Secures $2.2B for Spain Government's Buyout
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Telefonica (TEF - Free Report) is reportedly receiving a significant investment worth $2.20 billion from the government of Spain through the state-holding company — SEPI. The government will acquire a stake of up to 10% in Telefonica, per a report from Reuters.
The report further added that the acquisition will be done gradually over a period of up to two months, financed through public debt issuance. The market value of a 10% stake is approximately €2 billion, which is equivalent to $2.20 billion.
The participation of SEPI will likely provide Telefonica with greater shareholding stability and safeguard its strategic capabilities. The government of Spain’s presence as a key public shareholder is expected to reinforce the ownership stability of Telefonica.
Telefonica stated that it remains focused on executing its previously announced strategic plan for the next three years. Per the plan, the company aims to increase shareholder value by paying a minimum dividend of €0.30 per share from 2023 through 2026.
The current investment aims to counterbalance the large stake in Telefonica obtained by Saudi Arabia's STC in September. STC acquired a substantial 9.9% stake in Telefonica for €2.1 billion, which is equivalent to $2.25 billion.
The substantial stake comprises 4.9% of the company’s shares, with an additional 5% of economic exposure through financial instruments. STC's plan includes seeking regulatory approval to secure voting rights for this 5% interest held through these financial instruments.
However, the government of Spain has not yet received a request from STC to obtain authorization for exercising the voting rights associated with the financial instruments, added the report.
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company is focusing on divesting stakes in more mature businesses to finance its 5G and optic fiber initiatives to tackle profitability challenges caused by intense competition and the substantial investments needed for next-generation mobile technology infrastructure.
TEF currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 17.6% compared with sub-industry’s growth of 3.2% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have soared 51% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 19.8% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 3.9% in the past 60 days to $8.08. Watts Water’s long-term earnings growth rate is 7.8%.
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Telefonica (TEF) Secures $2.2B for Spain Government's Buyout
Telefonica (TEF - Free Report) is reportedly receiving a significant investment worth $2.20 billion from the government of Spain through the state-holding company — SEPI. The government will acquire a stake of up to 10% in Telefonica, per a report from Reuters.
The report further added that the acquisition will be done gradually over a period of up to two months, financed through public debt issuance. The market value of a 10% stake is approximately €2 billion, which is equivalent to $2.20 billion.
The participation of SEPI will likely provide Telefonica with greater shareholding stability and safeguard its strategic capabilities. The government of Spain’s presence as a key public shareholder is expected to reinforce the ownership stability of Telefonica.
Telefonica SA Price and Consensus
Telefonica SA price-consensus-chart | Telefonica SA Quote
Telefonica stated that it remains focused on executing its previously announced strategic plan for the next three years. Per the plan, the company aims to increase shareholder value by paying a minimum dividend of €0.30 per share from 2023 through 2026.
The current investment aims to counterbalance the large stake in Telefonica obtained by Saudi Arabia's STC in September. STC acquired a substantial 9.9% stake in Telefonica for €2.1 billion, which is equivalent to $2.25 billion.
The substantial stake comprises 4.9% of the company’s shares, with an additional 5% of economic exposure through financial instruments. STC's plan includes seeking regulatory approval to secure voting rights for this 5% interest held through these financial instruments.
However, the government of Spain has not yet received a request from STC to obtain authorization for exercising the voting rights associated with the financial instruments, added the report.
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company is focusing on divesting stakes in more mature businesses to finance its 5G and optic fiber initiatives to tackle profitability challenges caused by intense competition and the substantial investments needed for next-generation mobile technology infrastructure.
TEF currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 17.6% compared with sub-industry’s growth of 3.2% in the past year.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the broader technology space are Pegasystems (PEGA - Free Report) , Flex (FLEX - Free Report) and Watts Water Technologies (WTS - Free Report) . Pegasystems and Flex presently sport a Zacks Rank #1 (Strong Buy), whereas Watts Water Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have soared 51% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 19.8% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 3.9% in the past 60 days to $8.08. Watts Water’s long-term earnings growth rate is 7.8%.